Auto advertising spend has taken off again

Chris Pash
By Chris Pash | 24 September 2020

Ad spend in the automotive sector in Australia jumped in August following a major slump during the coronavirus crisis.

The market fell 34% to $485 million (EDS: corrects earlier) between January and August compared to the same period in 2019, according to Nielsen AdIntel figures.

However, ad spend rose 37% to $37 million in August (EDS: corrects earlier) compared to July

Mainstream brands have been more affected during COVID-19 than luxury brands.

Analysts at Zenith say this implies that those with higher incomes and travel overseas regularly – or are not as heavily affected by unemployment – are now spending their money on cars.

Time spent online with automotive content across all devices in June increased by 29% year on year.

Joshua Lee, Zenith Melbourne’s head of digital, says this signals growing interest and consideration to purchase as restrictions begin to ease across Australia.

“This surge in engagement and overall digital consumption should further encourage greater digital share of spend as we continue to see positive category growth,” he says.

Zenith says Australia is an advanced market when it comes to automotive digital advertising.

And digital’s share of spend is forecast to rise in Australia to 79% in 2022 from 75% in 2019, according to Zenith’s Automotive Advertising Expenditure Forecasts.

Across the world, automotive advertising expenditure is forecast to shrink by 21% in 2020 across 10 key markets.

Analysts at Zenith says the spread of the novel coronavirus and its effect on the global economy have left consumers uncertain about their financial futures and unwilling to commit to large purchases.

Car manufacturers have also suffered from disruption to their supply chains, as lockdowns shut manufacturing in different countries at different times.

Faced with pressure on both supply and demand, car brands cut their ad budgets very sharply when the severity of the crisis became clear.

The months of April and May recorded the greatest falls in most markets.

But the slide has since eased and Zenith expects falls to moderate progressively over the rest of the year.

However, automotive ad spend is poised to outperform the market with 10.5% growth in 2021 and 11.4% in 2022.

The large decline in 2020 will make the comparison easier in 2021, but delayed purchase decisions, and persistent reluctance to use shared and public transport, are expected to lead to the first growth in passenger car sales since 2017.

Zenith predicts that digital will be the only channel in which auto brands spend more in 2022 than in 2019.

Brands will focus more on premium digital video.

Television and radio will remain important media for automotive advertising, with relatively restrained declines of 6% and 7% respectively between 2019 and 2022.

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